Name and Location
Santo Domingo iron oxide/copper/gold project, Region III, Chile.

Client
Capstone Mining Corporation (70%) and Korea Resource Corporation (30%).

Project Description
The Santo Domingo mine has total proven and probable reserves of 391.7-million tonnes, grading 0.30% copper, 28.2% iron and 0,04 g/t gold.

The feasibility study envisages the development of two openpit mines using conventional drilling, blasting, loading with diesel hydraulic shovels and truck haulage, and a copper-iron concentrator designed to process a nominal 65 000 t/d using semiautogenous and ball milling, with conventional flotation using seawater to produce a copper concentrate.

Magnetite iron will be recovered from the copper rougher tailings using low-intensity magnetic separation. The planned infrastructure for the project also includes a tailings storage facility; iron concentrate and seawater supply pipelines; a port-located magnetite iron concentrate filter plant and stockpile; a port-located copper concentrate storage building; shiploading facilities; as well as on- and off-site infrastructure and support facilities.

The mine and the process facility will be located 50 km south-west of Codelco’s El Salvador copper mine and 130 km north-north-east of Copiapó, near the town of Diego de Almagro. The magnetite filter plant and stockpile, the copper storage building and port infrastructure will be located in Punta Roca Blanca, 41 km north of Caldera.

The name of the proposed port development is Port Santo Domingo.

For the first five years of full operation, Santo Domingo will have a yearly average production of about 248-million pounds, or about 110 000 t, of copper. The life-of-mine (LoM) average is 128-million pounds of copper, or about 58 000 t/y, over an estimated 18 years. The total LoM production is estimated at 2.3-billion pounds, or about one-million tonnes, of copper.

For the first five years of full operation, the average magnetite concentrate production is estimated at 3.3-million dry metric tonnes. The iron-ore concentrate production will increase to an average of 4.2-million dry metric tonnes a year over the mine life, with a total estimated production of about 75.1-million dry metric tonnes of iron concentrate.

Net Present Value/Internal Rate of Return
A net present value of $1.154.1-billion and an internal rate of return of 21.3%, with a payback of 4.2 years.

Value
Total initial capital costs are estimated at $1.7-billion

Duration
Not stated.

Latest Developments
Captsone will, over the next ten months leading up to completion of the first-stage gate decision point, focus on:
• advancing project engineering;
• working with regulators and communities to obtain approval for the environment impact statement (EIS) and secure the required social licence;
• securing a long-term power purchase agreement;
• developing detailed marketing studies leading to expressions of interest and/or letters of intent for at least 75% of the operation’s output;
• securing the port concession;
• developing a robust project execution plan, including the assessment and selection of available engineering, procurement and construction options and engineering, procurement and construction management options for the construction of all or portions of the project; and
• assessing project and corporate financing alternatives.

The next gate will be the approval of the EIS, which is expected at the end of the first quarter of 2015.

The second gate will be when engineering is advanced to 60% to 65%, with an estimated accuracy of about 10% expected in the third quarter of 2015.

The final gate will be when engineering is effectively complete, with a definitive cost estimate of about 10%-5%, which is expected to be in the first quarter of 2016.

At each gate, Capstone will evaluate the status of the project and communicate the next steps.

Key Contracts and Suppliers
Amec International Ingeniería y Construcción, Brass Chile, Knight Piesold, NCL Ingeniería y Construcción, PRDW Aldunate-Vásquez Ingenieros and Roscoe Postle Associates (feasibility study).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Capstone Mining Corporation VP: investor relations and communications Cindy Burnett, tel +1 604 684 8894,
fax +1 604 688 2180 oremail info@capstonemining.com.
Korea Resource Corporation, tel +56 2 951 9266 or fax +56 2 951 9267.